AAII Sentiment Survey Results For Frame Ended 9 March 2016

AAII Sentiment Survey Results For Frame Ended 9 March 2016

$DIA, $SPY, $QQQ, $VXX

The AAII Investor Sentiment Survey measures the percentage of individual investors who are Bullish, Bearish, and Neutral on the stock market for the next 6 months; individuals are polled from the ranks of the AAII membership weekly. Just 1 vote per member is accepted in each weekly sentiment voting frame

Data represents what direction members feel the stock market will be in the next 6 months

Sentiment Survey says:

Bullish: 37.4%, +5.3

Neutral: 38.3%, -0.5

Bearish: 24.4%, -4.9

Change from last week:
Bullish: +5.3
Neutral: -0.5
Bearish: -4.9

Long-Term Average:
Bullish: 38.61%
Neutral: 31.07%
Bearish: 30.32%

Commentary

Optimism among individual investors is at its highest level in 5 months, according to the latest AAII Sentiment Survey.

Pessimism fell to a new low for the year, Neutral sentiment is modestly lower.

Bullish sentiment

Expectations that stock prices will rise over the next 6 months, rose by 5.3 percentage points to 37.4%. Optimism was last higher on 5 November 2015 (39.0%). The increase was not large enough to prevent Bullish sentiment from staying below its historical average of 39.0% for the 18th straight week and the 51st out of the past 53 weeks.

Neutral sentiment

Expectations that stock prices will stay unchanged over the next 6 months, edged down 0.5 percentage points to 38.3%. This is the 6th week running, and the 58th time in the past 62 weeks with Neutral sentiment reading above its historical average of 31.0%.

Bearish sentiment

Expectations that stock prices will fall over the next 6 months, fell 4.9 percentage points to 24.4%. Pessimism was last lower on 31 December 2015 (23.6%). This is the 1st time Bearish sentiment has been below its historical average of 30.0% on consecutive weeks since a 3-week run between 26 November and 10 December 2015.

We are seeing the sentiment swing towards the optimistic side.

Since 11 February 2015, Bullish sentiment has risen by a cumulative 18.2 percentage points and Bearish sentiment has fallen by a cumulative 24.3 percentage points. As noted above optimism is still below its historical average.

The improvement in expectations about the short-term direction of the stock market corresponds with the ongoing rebound in the major indexes.

Though some individual investors are encouraged by the market’s rebound, sustained economic growth and low Crude Oil, Nat Gas and Gasoline prices, others fret about the pace of economic growth in the US, the pace of economic growth in China, tensions in the Middle East, the rate of earnings growth and prevailing valuations. Frustration with Washington politics also continues to be expressed.

This week’s special question asked AAII members how, if at all, Crude Oil prices are impacting their outlook for the stock market in general.

Responses were varied.

27% said Crude Oil prices were not impacting their outlook for the stock market.

20% view Crude Oil and stock prices as being correlated. Several of these respondents said Crude Oil prices are hurting stocks or at least causing volatility.

15% believe low Crude Oil prices are a positive for the economy, and therefore the stock market.

About 8% say low Crude Oil prices are a negative for stocks.

Some of these respondents fret about energy company bankruptcies hurting the credit markets. Almost 10% of respondents gave a forecast for Crude Oil, with slightly more anticipating prices to rise than expect prices to be fairly stable.

By Charles Rotblut, CFA, AAII Journal

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